1.
Reference Group
Dr Kumar Ratnesh
PGDM-21204

2.
Reference Groups
• Reference Group
– An actual or imaginary individual or group
conceived of having significant relevance upon
an individual’s evaluations,
aspirations/intentions, or behavior
– Three ways reference groups influence
consumers
1. Informational
2. Utilitarian
3. Value-Expressive
– Some people are more influential than others in
affecting consumers’ product preferences.

3.
Reference Groups
A Reference Group is an Actual or Imaginary Individual or Group Conceived
of Having Significant Relevance Upon an Individual’s Evaluations,
Aspirations, or Behavior.
Reference Groups Influence Consumers in Three
Ways/Forms:
Informational Value-Expressive
Utilitarian
Information, brand-
related knowledge,
experts’ experience
Influenced by other social/family
members, etc.; as expected
Image enhancement,
admired or respected
by others;
Help showing as:
athlete, successful
person, good parents,
etc.

4.
When Reference Groups Are Important
Luxuries
Rather Than
Necessities
Socially
Conspicuous
or Visible to
Others
A Reference
Groups Influence
Is More Powerful
and Important
for Purchases
That Are:
e.g. sailboats
e.g. living room
furniture, clothing

5.
Relative Reference Groups’
Influence on Purchase Intention
(2 dimensions of the “degree of importance” of reference group:
publicly/privately consumed, luxury/necessity product)
Figure 11.1

6.
When Reference Groups
Are Important (or so Persuasive)?
• Social Power:
– The capacity to alter the actions of others
– different sources or basis of social power:
• 1. Referent Power:
– When consumers imitate qualities by copying behaviors of
a prominent person they admire.
• 2. Information Power:
– Able to influence consumer opinion by virtue of their
(assumed) access to the “truth”
• 3. Legitimate Power:
– Granted to people by virtue of social agreements,
sometimes conferred by a uniform

7.
When Reference Groups
Are Important (cont.)
• 4. Expert Power:
– Derived from possessing specific knowledge about
a content area
• 5. Reward Power:
– When a person or group has the means to provide
positive reinforcement
• 6. Coercive Power:
– Influencing a person by social or physical
intimidation

8.
The Power of Reference Groups
Referent
Power
Legitimate
Power
Information
Power
Expert
Power
Coercive
Power
Reward
Power
Types of
Reference
Group
Power e.g. Michael Jordan
– admired person
e.g. Editor of a
newspaper
e.g. policemen, professors, doctors
e.g. a famous scientist,
expert in Robotics
e.g. reward, social acceptance
– awards or medals
e.g. social or physical intimidation/threat -
gangsters; fear appeals
SOCIAL POWER-
Capacity to alter the
actions of others

9.
Expert Power
• A physician has expert
power, and a white
coat reinforces this
expertise by conferring
legitimate (legal or
high professional
quality) power.

10.
Types of Reference Group Influence
• Reference Group:
– Any external influence that provides social cues
(signals)
• (1) Normative Influence:
– The reference group helps to set and enforce
fundamental standards of conduct. (e.g. parents’
influence on marriage attitude; a Photo club)
• (2) Comparative Influence:
– When decisions about specific brands or activities
are affected. (e.g. Harley-Davidson club)

11.
• Marketers often portray
products being used in
groups that represent
favorable reference
groups to the target
market.
• What type of message
does this ad convey?
What type of influence is
this ad designed to exert
on its target audience?
Discussion Question

12.
• What type of message
does this ad convey?
– Persuasive message
with the use of
Reference Group’s
influence
• What type of influence is
this ad designed to exert
on its target audience?
– Comparative
influence
Discussion Question

13.
Brand Communities and Tribes
• Brand Community:
– A set of consumers who share a set of social relationships
based upon usage or interest in a product. (don’t necessary
live near each other)
• E.g. Brandfests (e.g. organized events sponsored by Nike)
• Consumer Tribe:
– A group of people who share a lifestyle and who can
identify with each other because of a shared allegiance
(loyalty) to an activity or product (such as skateboarding,
basketball, car driving)
• Tribal Marketing:
– To link one’s product to the needs of a group as a whole.
(e.g. Mini Cooper, Mustang – car racing)

14.
Products as a Way to be Popular
• Many products, especially those targeted to young
people, are often touted/promoted as a way to take the
inside track to popularity. This Brazilian ad lets us
know about people who don’t like a certain shoe.
Bonehead – stupid person

15.
Membership vs. Aspirational
Reference Groups
• Aspirational Reference Groups
– Comprise idealized figures such as successful business
people, athletes, or performers.
• Membership Reference Group
– Ordinary people whose consumption activities provide
informational social influence. Membership are affected by
several factors:
• Propinquity: Physical nearness.
• Mere Exposure: Liking persons or things simply as a
result of seeing them more often (mere exposure
phenomenon)
• Group Cohesiveness: The degree to which members of a
group are attracted to each other and value their group
membership.

16.
Match.com

17.
Positive Versus Negative
Reference Groups
• Avoidance Groups
– Groups that consumers purposely try to distance
themselves from
• Nerds (stupid, unattractive)
• Druggies (addicted to drugs)
• Preppies (manner and dress like in traditional
preparatory school)
– The motivation to distance oneself from a negative
reference group can be as powerful or more
powerful than the desire to please a positive group

18.
Positive Reference Groups
• This recruiting ad
presents a compelling
role model for young
women contemplating
a career in the armed
forces.

19.
Consumers Do it in Groups
Some Phenomena
• Deindividuation:
– A process in which individual identities become
submerged within a group.
• Social Loafing:
– People do not devote as much to a task when their
contribution is part of a larger group effort
• Risky Shift:
– Group members are willing to consider riskier alternatives
subsequent to group discussion
• Diffusion of Responsibility:
– As more people are involved in a decision, each individual
is less accountable for the outcome

20.
Consumers Do it in Groups (cont.)
• Value Hypothesis (to explain the increased
riskiness/risky shift):
– Riskiness is a culturally valued characteristic to which
individuals feel pressure to conform to attributes valued by
society
• Decision Polarization:
– Whichever direction the group members were leaning
toward before discussion becomes more extreme
subsequent to discussion (risky choice Vs conservative
choice)
• Home Shopping Parties:
– Capitalize on group pressures to increase sales (e.g.
Tupperware party)

21.
Deindividuation
• Costumes hide our true identities and encourage
deindividuation.

22.
Home Shopping Parties
• Women at a home
Tupperware party.

23.
Group Influences
• Group pressure often influences our clothing choices.

24.
Group Effects on Individual
Behavior
Deindividu-
alism
Social
Loafing
Risky
Shift
Group
Effects
Bandwagon
Effect
Shopping
Behavior
Decision
Polarization
e.g. behave wildly at
costume parties
greater willingness to take risk
following group discussion
moving toward extreme; risky -
conservative
more purchase with
one other person
devote less effort for
group work
more & more group
members, more conform

25.
Conformity
• Conformity
– A change in beliefs or actions as a reaction to real or
imagined group pressure.
• Norms
– Informal rules that govern behavior (for a society to function)
• Factors Influencing the Likelihood of Conformity
– Cultural Pressures
– Fear of Deviance (resulted in punishment or sanctions)
– Commitment
• Principle of Least Interest (person/group that is least
committed to staying in a relationship has the most power)
– Group Unanimity (same opinions), Size, and Expertise – as groups gain
in power, compliance increases
– Susceptibility to Interpersonal Influence
• Role-relaxed consumers (those are low in susceptibility to
influence of others)

26.
Informational
Conformity That Occurs Because
the Group’s Behavior is Taken
as Evidence About Reality.
Conformity
Conformity Refers to a Change in Beliefs or Actions
as a Reaction to Real or Imagined Group Pressure.
Types of Social Influence
Normative
Person Conforms to Meet
the Expectations of a
Person or Group.
e.g. clothing; ?? wearing masks in
public (SARS)
e.g. mimic others’ behavior, gift-giving
Situation is uncertain,
ambiguous

27.
Factors Affecting the Likelihood of Conformity
Cultural Pressures
Fear of Deviance
Commitment
Group Dynamics
Sex Differences
Interpersonal Influences
China/Japan - collectivism
e.g. terrorists’ willing to die
As groups gain in power,
compliance increases
susceptibility to be influenced by others

28.
Social Comparison
• Social Comparison Theory:
– Asserts that people look to the behavior of others to
increase the stability of their self-evaluation
– People tend to choose co-oriented peer: a person of
equivalent standing
• Resisting Conformity:
– Independence: Being oblivious (unaware of) or indifferent
to the expectations of others
– Anticonformity: Defiance (opposing) of the group is the
actual behavior
– Reactance: The negative emotional state that results when
we are deprived of our freedom to choose

29.
Resistance to Influence
Vs.
Anticomformity
Defiance of the
Group is the
Object of Behavior
Independence
Oblivious to
(unaware of) what
is expected by
others
Reactance
Need to Preserve Freedom of
Choice; People try to Overcome a
Loss of Freedom; Negative to
extremely overbearing promotions.

30.
• This ad for a video
game says,
“Conformity Bytes!”,
but then captions
(titles), “Join the
Revolution!” Why?
• Does this ad
encourage
independence or
anticonformity?
Discussion Question

31.
Word-of-Mouth Communication
• Word-of-Mouth (WOM):
– Product information transmitted by individuals to
individuals.
• Negative WOM and the Power of
Rumors:
– Negative WOM: Consumers weigh negative info
from other consumers more heavily than they do
positive comments

32.
Word-of-Mouth Communication
Much Information About Products and Services is
Actually Conveyed by Individuals on an Informal
Basis called Word-of-Mouth Communication (WOM)
Factors That Encourage WOM Are:
Person is Highly Involved With the Product
Person is Highly Knowledgeable About the Product
Person Has a Genuine Concern for Someone Else
(benevolence)
Person May be Uncertain About a Recent Purchase

33.
Word-of-Mouth
• The U.S. Postal
Service hopes to
create a buzz via word
of mouth.

34.
Rumors
• Hoaxkill.com is a Web site dedicated to
tracking hoaxes/tricks and debunking/exposing
product rumors.

35.
The Transmission of Misinformation
Figure 11.2

36.
Cutting-Edge WOM Strategies
• Virtual Communities
– Virtual Community of Consumption: A
collection of people whose online interactions
are based upon shared enthusiasm for and
knowledge of a specific consumption activity.
• Multi-user Dungeons (underground chamber)
(MUD)
• Rooms, rings and lists (e.g. chat rooms)
• Boards
• Blogs (weblog)

37.
Multi-User Dungeons

38.
Four Types of Virtual
Community Members
• Tourists:
– Lack strong social ties to the group
• Minglers (merger, mixer):
– Maintain strong social ties, but are not interested in
the central consumption activity
• Devotees:
– Express strong interest in the activity, but have few
social attachments to the group
• Insiders:
– Exhibit both strong social ties and strong interest
in the activity

39.
Virtual Communities
Figure 11.3
2 factors: self-centrality (dominance of activity towards
self-concept); intensity of social relationship/ties

40.
Guerrilla and Viral Marketing
• Guerrilla Marketing
– Promotional strategies that use unconventional
locations and intensive word-of-mouth campaigns
to push products.
• Brand Ambassadors
• Viral Marketing
– Refers to the strategy of getting customers to sell a
product on behalf of the company that creates it.
(e.g. a small ad embedded in Hot Mail)

41.
Guerrilla Marketing Ads
• Ads painted on sidewalks are one form of guerrilla
marketing.